Spencer Stuart Board Index

Spencer Stuart Perspective for 2016
Investor attention to board performance and governance continues to
escalate, and, increasingly, it’s large institutional investors — so-called
“passive” investors — who are making known their expectations in areas
such as board composition, disclosure and shareholder engagement.
Long-term investors have shifted their posture to taking positions on
good governance, and are increasingly demonstrating common ground
with activists on governance topics.
Board composition is a particular area of focus, as traditional
institutional investors have become more explicit in demanding that
boards demonstrate that they are being thoughtful about who is sitting
around the board table and that directors are contributing. They are
looking more closely at disclosures related to board refreshment, board
performance and assessment practices, in some cases establishing
voting policies on governance.
Boards are taking notice. Directors want to ensure that their boards
contribute at the highest level, aligning with shareholder interests and
expectations. In response, boards are enhancing their disclosures on
board composition and leadership, reviewing governance practices and
establishing protocols for engaging with investors. Here are some of the
trends we are seeing in the key areas of investor concern.
Board composition
The composition of the board — who the directors are, the skills and
expertise they bring, and how they interact — is critical for long-term
value creation, and an area of governance where investors increasingly
expect greater transparency. Shareholders are looking for a wellexplained
rationale for why the group of people sitting around the
board table are the right ones based on the strategic priorities of the
business. They want to know that the board has the processes in place
to review and evolve board composition in light of emerging needs,
and that the board regularly evaluates the contributions and tenure
of current board members and the relevance of their experience.
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